automobile and engineering sector

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Discussion about impact on Indian economy by Automobiles & Engineering Goods. (International trade perspective) Presented by: Kritika Arora Prakash G Prateek Kr. Sawhney A PART OF: GROWTH PROSPECTS OF THURST AREAS OF INDIAN EXPORTS

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Page 1: Automobile and Engineering Sector

Discussion about impact on Indian economy by Automobiles &

Engineering Goods.(International trade perspective)

Presented by:Kritika Arora

Prakash GPrateek Kr. Sawhney

A PART OF: GROWTH PROSPECTS OF THURST AREAS OF INDIAN EXPORTS

Page 2: Automobile and Engineering Sector

INTRODUCTION

The first commercial automobile ran on India’s road was in 1897, which was imported directly from Germany.

By 1940, Indian automobile sector got a start up by Embryonic Automotive industry. By1950 manufacturing of parts for automobiles started.

The entry of foreign automobile industries after 1970’s gave the complete shape for Indian automobile industry and a start up for it’s growth.

The liberalization policy and weakening of license raj by the year 1991, allowed the automobile industries to promote their operations in a large scale.

Source:Engineering Export Promotion Councilhttp://www.eepc.com

Page 3: Automobile and Engineering Sector

INDIA’S AUTOMOBILE SECTOR…After 1991, the liberalization policy for foreign trade

has opened the door for foreign Automobile industries.

Initial entry was majorly by Imports and JVs with Indian Auto tycoons Bajaj, Maruti, Tata, TVS, Ashok Leyland, etc.,

By 1995, several automobile industries were set in India, where parts were imported and assembled for sales in Indian subcontinent .

Today around 70 major automobile manufacturers have their ventures in India either on its own or JV or strategic alliance with Indian companies or foreign companies.

More than 1043 major players are there contributing to Indian automobile industry growth ad development.

Source:Engineering Export Promotion Councilhttp://www.eepc.com

Page 4: Automobile and Engineering Sector

FIGURES..The automotive industry (including components &

tyres) has already attained a turnover of US $105888 billion.

The industry provides direct and indirect employment to 13.1 million people.

The contribution of the automotive industry to GDP has risen from 2.77% in 1992-93 to 4.14% in 2008-09.

The industry is also making a contribution of 17% to the kitty of indirect taxes of the Government.

In 2010 (April-August), overall automobile exports registered a growth rate of 48.42 percent with industry producing 7,063,063 vehicles.

http://commerce.nic.in/

Page 5: Automobile and Engineering Sector

EXPORTS AND IMPORTS

After 1998, Indian automobile industry developed into a major sector, assembling almost every car that was sold in Indian subcontinent.

Imports were reduced by 15 times and exports were promoted, compared to the number of automotives traded previously.

More than 44 varieties of automobile are manufactured which constitutes the 59 different automobile sales such as Motor cycles, Cars, SUVs, Lorry, Bus etc.,

Around 84 major ancillaries for the automobile industry is being imported for assembling and sales purpose in India.

6% of Indian automobiles on road today are imported directly from countries like Japan, Germany, Korea and US.

http://commerce.nic.in

Page 6: Automobile and Engineering Sector

PRODUCTION HUBSA major chunk of India's automobile manufacturing

industry is based in and around the city of Chennai ("Detroit of India“), accounting for 60 per cent of the country's automotive exports.

Gurgaon and Manesar are hubs where most of the cars in India are manufactured or assembled.

The Chakan corridor near Pune, Maharashtra is another vehicular production hub.

Halol in Gujarat, Aurangabad in Maharashtra, Kolkatta in West Bengal are some of the other automotive manufacturing regions around the country

Source:Source:Engineering Export Promotion Councilhttp://www.eepc.com

Page 7: Automobile and Engineering Sector

TREND IN THREE YEARSExports from India touched 3,31,539 units in FY09

as against 2,11,112 units in the previous financial year.

Overseas presence with exports from India by registering a growth of 57.04% in the last fiscal.

Overall vehicle exports from India grew by 23.60% at 15,30,660 units in the last financial year, while the same stood at 11,38,333 units in the FY09.

Exports growth in the financial year 2009 was robust also in the two-wheeler category, which registered 22.50 per cent rise at 10,04,174 units as against 7,69,713 units in the year 2007-08.

Source: http://www.fundoodata.com/industry-companies/Automobile/Auto-Ancillaries/Automobiles/224.html

Page 8: Automobile and Engineering Sector

CLASSIFICATION OF COMMODITIES

Source: Society of Indian Automobile Manufacturershttp://www.siamindia.com/scripts/domestic-sales-trend.aspx

Page 9: Automobile and Engineering Sector

INDIAN AUTOMOBILE EXPORT SUMMARY

http://commerce.nic.in

Page 10: Automobile and Engineering Sector

INDIAN AUTOMOBILE EXPORT SUMMARY

Country wise

http://commerce.nic.in* Fig in Bln INR

Page 11: Automobile and Engineering Sector

INDIAN AUTOMOBILE EXPORT SUMMARY

http://commerce.nic.in

Page 12: Automobile and Engineering Sector

INDIAN AUTOMOBILE EXPORT SUMMARY

Decreased export commodities

http://commerce.nic.in

Page 13: Automobile and Engineering Sector

INDIAN AUTOMOBILE IMPORT SUMMARY

http://commerce.nic.in

Page 14: Automobile and Engineering Sector

INDIAN AUTOMOBILE IMPORT SUMMARY

http://commerce.nic.in

Page 15: Automobile and Engineering Sector

INDIAN AUTOMOBILE IMPORT SUMMARY

Increased Import commodities

http://commerce.nic.in

Page 16: Automobile and Engineering Sector

INDIAN AUTOMOBILE IMPORT SUMMARY

Decreased Import commodities

http://commerce.nic.in

Page 17: Automobile and Engineering Sector

DOMESTIC INDUSTRY SCENARIO The cumulative growth of the Passenger Vehicles

segment during April 2009 – March 2010 was 12.17%.

Passenger Cars grew by 11.79%, Utility Vehicles by 10.57% and Multi Purpose Vehicles by 21.39% for the year 2009-10.

The Commercial Vehicles segment grew marginally at 4.07%. While Medium & Heavy Commercial Vehicles declined by1.66%, Light Commercial Vehicles recorded a growth of 12.29%.

Three Wheelers sales fell by 9.71%. Two Wheelers registered a negative growth rate

of 7.92% during 2009-10.Source: Society of Indian Automobile Manufacturers http://www.siamindia.com/scripts/domestic-sales-trend.aspx

Page 18: Automobile and Engineering Sector

AUTOMOBILE DOMESTIC SALES TRENDS

Categories

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

Passenger Vehicles 902,096 1,061,572 1,143,076 1,379,979 1,549,882 1,552,703 1,949,776

Commercial Vehicles 260,114 318,430 351,041 467,765 490,494 384,194 531,395

Three Wheelers 284,078 307,862 359,920 403,910 364,781 349,727 440,368

Two Wheelers 5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,371,231

Grand Total 6,810,537 7,897,629 8,906,428 10,123,988 9,654,435 9,724,243 12,292,770

Source:Society of Indian Automobile Manufacturers http://www.siamindia.com/scripts/domestic-sales-trend.aspx

* Number of Vehicles

Page 19: Automobile and Engineering Sector

Domestic Market Share for 2009-2010

Source:Society of Indian Automobile Manufacturer http://www.siamindia.com/scripts/market-share.aspx

Page 20: Automobile and Engineering Sector

Foreign Trade PoliciesCredit of embedded tax SIAM had got a study done through ICRA Advisory Services to

estimate the cascading impact of embedded tax in manufacturing vehicles in India for which no set-off is available under any scheme.

ICRA looked at two states, Maharashtra and Tamil Nadu, which have automotive hubs and had estimated in July 2009 that the quantum of embedded tax amounts to around 12% of manufacturing cost.

Since this makes our vehicles less competitive by 12% in the international markets, SIAM suggests that any export incentive scheme offered to the exporters should factor this in the total value of credit. This should be in addition to the Drawback/DEPB for actual import duty suffered on raw material and component.

DEPB Scheme should be extended for at least two years till the internal reforms are done.

Source: http://www.iitrade.ac.in/kmarticle.asp?id=187http://www.siamindia.com/scripts/eximpolicy.aspx

Page 21: Automobile and Engineering Sector

Drawback for 2% education CESS should be admissible for claim

Presently the import duty structure is as under a) Basic Custom Duty b) CVD in lieu of Excise Duty + 2% CESS on CVD c) 2% CESS on total Duty (a+b)

CVD and 2% CESS on all imported items are refunded as CENVAT credit. When the imported input is used for export production, basic duty is refunded as drawback. However, 2% CESS on total Duty remains non-CENVATable / refundable.

Since all duties on inputs stage are neutralised by way of drawback and or under licence route, the 2% CESS on total duty should also be refunded as drawback.

Foreign Trade Policies

Source: http://www.iitrade.ac.in/kmarticle.asp?id=187http://www.siamindia.com/scripts/eximpolicy.aspx

Page 22: Automobile and Engineering Sector

Interest on duty foregone under duty exemption schemes The Exim Policy provides import of Capital Goods, raw

materials, components, consumables etc. either under concessional duty rate or at zero duty for carrying out manufacturing activities with time bound export obligations.

Due to some unavoidable changed circumstances, if the importer is not able to fulfill the obligation, then importer needs to regularise the imports on payment of duty + interest @ 15% p.a.

Under the prevailing market conditions, the ruling interest rate is in the range of 6% to 8% p.a for all types of transactions. To reduce the burden and to bring down the transaction cost, the interest rate for regularisation of imports need to be plugged max. @ 10% p.a. Exporters who undertake the business risks can survive during uncertainties.

Foreign Trade Policies

Source: http://www.iitrade.ac.in/kmarticle.asp?id=187http://www.siamindia.com/scripts/eximpolicy.aspx

Page 23: Automobile and Engineering Sector

Special Focus Initiative Expeditious clearance of approvals required from DGFT shall be

ensured. Exporters /Associations would be entitled to utilize MAI (financial

assistance from Government ranging from 25% to 100% of total cost depending upon activity and implementing agency. ) & MDA (90% of the cost in carriage and 25% of the cost of publicity material.) Schemes for promoting Electronics and IT Hardware Manufacturing industry exports.

Value added manufacture export, a minimum 15% value addition on imported inputs under Advance Authorization Scheme has been stipulated (Duty Credit scrip shall be adjusted as CENVAT Credit).

Automobiles and other engineering products have been included for incentives under Focus Product, and Market Linked Focus Product Schemes incentivized at 2% of FOB value of exports

Second hand capital goods, without any restriction on age, may also be imported under EPCG scheme.

Source: http://www.iitrade.ac.in/kmarticle.asp?id=187http://www.siamindia.com/scripts/eximpolicy.aspx

Page 24: Automobile and Engineering Sector

Foreign Trade Policy (import related) Import of motor cars, sports utility vehicles/all purpose vehicles shall be

allowed only to hotels, travel agents, tour operators or tour transport operators and companies owning/operating golf resorts, subject to the condition that:

(i) total foreign exchange earning from hotel, travel & tourism and golf tourism sectors in current and preceding three licensing years is Rs.1 .5 crores or more.

(ii) ‘duty saved’ amount on all EPCG Authorizations issued in a licensing year for import of motor cars, sports utility vehicles/ all purpose vehicles shall not exceed 50% of average foreign exchange earnings from hotel, travel & tourism and golf tourism sectors in preceding three licensing years.

(iii) vehicles imported shall be so registered that the vehicle is used for tourist purpose only. A copy of the Registration certificate should be submitted to concerned RA as a confirmation of import of vehicle. However, parts of motor cars, sports utility vehicles/ all purpose vehicles such as chassis etc. cannot be       imported under the EPCG Scheme.

Source: http://www.iitrade.ac.in/kmarticle.asp?id=187http://www.siamindia.com/scripts/eximpolicy.aspx

Page 25: Automobile and Engineering Sector

Engineering sector is the largest in the overall industrial sector in India.

Engineering is a diverse industry with a number of segments: Heavy engineering. Light engineering.

This sector is less fragmented at the top as competencies required are high as compared to the lower end.

A company from this sector can be a – power equipment manufacturer (like transformers and

boilers), execution specialist a niche player (like providing environment friendly solutions).

Engineering Sector

Source:Engineering Export Promotion Council http://www.eepcindia.org/trade-association.asp

Page 26: Automobile and Engineering Sector

Classification

Heavy Engineering Light Engineering

Cement machinery Sugar machinery Rubber machinery Metallurgical machinery Machine tool Material handling

equipment Mining Machinery Dairy machinery Automobile

Welded steel pipes and tubes

Process control instrument

Antifriction roller bearing

Plain paper copier

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/trade-association.asp

Page 27: Automobile and Engineering Sector

The engineering sector in India has been growing on the back of growth in the user industries and several new projects being undertaken in various core industries such as railways, power, infrastructure, etc. Capacity creation in sectors such as infrastructure, oil & gas, power, mining, automobiles, auto components, steel, refinery, consumer durables, etc, is driving growth of the engineering industry. Growth of the key user-industries Government’s thrust on the power and construction industries India being preferred by global companies as an outsourcing

destination as it enjoys lower labour cost and better designing capabilities

Key Growth Drivers of Indian Engineering Sector

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/trade-association.asp

Page 28: Automobile and Engineering Sector

Production Centers in India

Location Air Terminal Sea Terminal

Major Commodities Produced for Exports

BANGALORE Bangalore BangaloreApparels, Engineering Goods

VISHAPATNAM Chennai VizagSteel, Engineering Goods

CALCUTTA Kolkatta Haldia

Engineering Goods, Pharma, Footwear, Various

PUNE Mumbai Nava Sheva Engineering Goods

CHANDIGARH New Delhi New Delhi

Pharmaceuticals, Engineering Goods, Food Products

Page 29: Automobile and Engineering Sector

Domestic Players The Indian engineering industry is highly competitive,

with several companies having a presence in each of the segments.

BHEL: Public sector enterprise. India’s largest engineering and

manufacturing enterprise. Caters to power generation and transmission,

transportation(especially railways), telecom, renewable energy and industry at large.

Hindustan Aeronautics Ltd.: Public sector enterprise. Supplies / services are mainly to Indian defence services, Coast Guard and

Border Security Force. Transport aircraft and helicopters have also been

supplied to airlines as well as state governments of India.Source: Indian brand equity foundation

http://www.ibef.org/download/Engineering_171109.pdf

Page 30: Automobile and Engineering Sector

Domestic PlayersThermax Ltd: Originally incorporated asThermo-Dynamics Pvt. Six core businesses - Boilers and Heaters, Absorption

Cooling, Water and Waste Solutions, Chemicals for Energy and Environment Applications, Captive Power and Cogeneration systems, Air Pollution and Purification. It has five manufacturing facilities, 12 sales and service offices and a widespread franchisee and dealer network across the country.

Larsen & Toubro Ltd (L&T): India’s largest engineering and construction conglomerate. Four segments namely Engineering and Construction (E&C),

Cement, Electrical and electronics and diversified business.

Source: Indian brand equity foundationhttp://www.ibef.org/download/Engineering_171109.pdf

Page 31: Automobile and Engineering Sector

Trend in Last Five Years

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/performance.asp

Page 32: Automobile and Engineering Sector

Analysis of Trend of Last Five Years During the last five years, engineering exports

have achieved an average growth of over 13%. In the year 2009-10 there was a drop in engineering exports by about 18% which was primarily owing to savior global recession especially in USA & Europe. Baring the year 2009-10 there has been a study growth year on year and the future outlook also looks positive.

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/performance.asp

Page 33: Automobile and Engineering Sector

EXPORT OF ENGINEERING GOODS & SERVICES DURING 2008-09 TO 2009-10

SL. GROUP-WISE EXPORT 2008-09

Value in US $ Million

2009-10Value in US $ Million

Growth %

A CAPITAL GOODS 18244.15 16013.31 -12.22B CONSUMER

DURABLES6338.28 5624.35 -11.26

C NON-FERROUS METALS & PRODUCTS THEREOF

3535.49 3460.85 -2.11

D PRIMARY IRON & STEEL & ITEMS THEREOF

13464.57 8640.14 -35.83

  TOTAL 41582.49 33738.65 -18.86

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/export-statistics.asp

Page 34: Automobile and Engineering Sector

Engineering Goods Export Comparison

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/transformation.asp#transform

Page 35: Automobile and Engineering Sector

Export of Capital Goods(Value in US $ Millions)

CAPITAL GOODS 2008-09 2009-10 Growth %2 - 3  wheeler 487.71 589.09 20.78Aircraft & Spares 1402.18 1005.04 -28.32Boiler & Parts 418 376.19 -10.00Cement Mill Machinery 2 4.54 127.00Coastal Vessels & Ships 3715.56 2554.31 -31.25Commercial Vehicles 3050.2 3565.38 16.89Cranes, Lifts & Winches 155.67 137.86 -11.44Electric Power Equipments & Parts

3669.83 3222.59 -12.19

Electric Wires & cables 416.1 287 -31.02Fencing Structures 400.3 354.65 -11.40Food Processing Machinery & Parts

257.44 271.09 5.30

Freight Containers 14.98 6.67 -55.47Heating & Cooling Equipments

332.21 283.06 -14.79

Source: Engineering Export Promotion Council http://www.eepcindia.org/export-statistics-dollar.asp#capital

Page 36: Automobile and Engineering Sector

Export of Capital Goods(Value in US $ Millions)

CAPITAL GOODS 2008-2009 2009-2010 Growth%Knitting Machinery 14.11 8.23 -41.67Machine Tools 375.15 276.51 -26.29Other Chemical Plant 763.25 738.04 -3.30Other Construction Machinery

668.14 739.81 10.72

Other Industrial Machinery

1147.5 798.32 -30.50

Sugar Machinery & Parts 25.38 14.91 -41.25Textile Jute Mill Machinery

121.96 109.99 -9.81

Tractors & Agricultural Equipments

576.51 481.87 -16.42

Transmission Line Towers & Parts

185.3 158.78 -14.31

Wagons Coaches & Locos

44.67 29.38 -34.22

TOTAL OF "A" 18244.15 16013.31Source: Engineering Export Promotion Council http://www.eepcindia.org/export-statistics-dollar.asp#capital

Page 37: Automobile and Engineering Sector

Export of Consumer Durables(Value in US $ Millions)

CONSUMER DURABLES 2008-09 2009-10 Growth %Accumulator 106.08 93.07 -12.26Air Compressor 152.34 107.21 -29.62Automobile Parts 1808.84 1517.22 -16.12Bicycle & Parts 209.3 148.76 -28.92Cutting Tools 207.92 186.14 -10.48Dry Batteries 15.74 63 300.25Electric Fan & Parts 144.03 130.41 -9.46Electric Manufacturers N.O.S.

344.72 285.68 -17.13

Hand Tools 196.48 149.45 -23.94I.C. Engine & Parts 1067.79 919.45 -13.89Instruments All Types 1011.71 1034.83 2.29Misc. Manufacturers N.O.S 146.3 139.57 -4.60Office Equipments 56.46 60.44 7.05Prime Mica & Mica Products 236.51 204.46 -13.55Pumps 390.36 341.51 -12.51Sewing Machines and Needles etc.

26.14 28.44 8.80

Stainless Steel Utensils 189.64 192.18 1.34Steel Files 27.92 22.53 -19.31

TOTAL OF "B" 6338.28 5624.35 -11.26Source: Engineering Export Promotion Council

http://www.eepcindia.org/export-statistics-dollar.asp#consumer

Page 38: Automobile and Engineering Sector

Export of NON-Ferrous Metals & Products Thereof(value in US $ Millions)

NON-FERROUS METALS & PRODUCTS THEREOF

2008-09 2009-10Growth

%

Aluminum & Products Thereof  1165.18 1042.08 -10.56

Other Non Ferrous Metal & Products

2370.31 2418.77 2.04

TOTAL OF “C” 3535.49 3460.85 -2.11

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/export-statistics-dollar.asp#nonferusmetal

Page 39: Automobile and Engineering Sector

Export of Primary Iron & Steel &Items Thereof(value in US $ Millions)

PRIMARY IRON & STEEL & ITEMS THEREOF

2008-09 2009-10 Growth %

Bolts & Nuts (Fasteners) 334.84 246.93 -26.25Bright Bars 519.51 182.59 -64.85Electrodes 30.97 23.22 -25.02Ferro Alloys 1546.81 880.41 -43.08Ferrous Holloware 422.41 400.75 -5.13Ferrous industrial castings 639.78 521.35 -18.51Other Steel Products N.O.S 819.06 597.53 -27.05Prime Iron & Steels 5235.44 3282.63 -37.30Railway Track Materials (Fasteners) 9.5 6.48 -31.79Razor Blades 45.47 50.14 10.27Sanitary Castings 605.82 440.02 -27.37Steel Forgings 548.58 354.86 -35.31Steel Furniture 40.72 34.55 -15.15Steel Pipes & Tubes 2275.32 1344.15 -40.92Steel Wire 237.44 167.91 -29.28Steel Wire Ropes 61.53 37.58 -38.92Wire Nails Nettings & Stranded Wires 91.37 69.04 -24.43

TOTAL OF "D" 13464.57 8640.14 -35.83Source:Engineering Export Promotion Council http://www.eepcindia.org/export-statistics-dollar.asp#primeiron

Page 40: Automobile and Engineering Sector

Growth of the Engineering Sector

Source: engineering export promote council http://www.eepcindia.org/transformation.asp#transform

Page 41: Automobile and Engineering Sector

Engineering Goods Export Summary

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/diversification.asp#diverse

Page 42: Automobile and Engineering Sector

Macro economic fundamentals continue to remain strong. But the government’s monetary measures to curb liquidity, a rise in input costs like oil, coupled with the recent slowdown in the industrial sectors may impact growth momentum of the capital goods sector in the short term.

The current pace of hydrocarbon and infrastructure development in India and its neighboring countries (for the Indian companies that cater to these areas) hold promise for engineering companies.

Prospects of Engineering Industry

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/world-maket/country-market.asp

Page 43: Automobile and Engineering Sector

FTP Provision for Engineering goods exports

FOCUS PRODUCT SCHEME (FPS) Objective is to incentivise export of such products,

which have high employment intensity in rural and semi urban areas, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products Exports of notified products to all countries (including SEZ units) shall be entitled for Duty Credit scrip equivalent to Additional 2% bonus benefits over and above the existing benefits under Focus Product Scheme will significantly benefit Bicycle parts and Grinding Media Balls exporters.

Page 44: Automobile and Engineering Sector

Additional items of Engineering, namely, Pipes & Tubes, Electric Generating Sets, Cast Articles of Iron & Steel, Ferro Manganese and Ferro Silicon shall now be entitled for benefit @ 2% under FPS.

A number of Engineering items namely, Machine Tools, Compressors, Iron & Steel Structures including Transmission Towers and Scaffolding, LPG Cylinders, Ductile Tubes & Pipes shall now be entitled for benefits @ 2% of FOB value of exports to all markets under FPS.

FTP Provision for Engineering goods exports

Page 45: Automobile and Engineering Sector

FTP Provision for Engineering goods exports MARKETING DEVELOPMENT ASSISTANCE SCHEMEIt is a scheme to encourage exporters to access n develop overseas

markets• Participation in international trade fairs,• Publicity campaigns• Overseas study tours Exporting companies with an f.o.b. value of exports of upto Rs. 15

crore in the preceding year will be eligible for MDA assistance for participation in trade delegations/BSMs/fairs/exhibitions abroad to explore new markets for export of their specific product(s) and commodities from India in the initial phase. This will be subject to the condition that the exporter is having complete 12 months membership with concerned EPC etc. and filing of returns with concerned EPC/organisation regularly. However, this condition would not apply in case of a new EPC for a period of 5

years from the date of its creation.

Source: Engineering Export Promotion Council http://www.eepcindia.org/mda-scheme.asp

Page 46: Automobile and Engineering Sector

FTP Provision for Engineering goods exports Assistance would be permissible on travel

expenses by air, in economy excursion class fair and/or charges of the built up furnished stall. This would, however, be subject to an upper ceiling mentioned in the table per tour.Sl.No Area/Sector No. of visits

eligibleMaximum Financial ceiling per event

1 Focus LAC 1 Rs. 1,80,000

2 Focus Africa (Including WANA

countries)

1 Rs. 1,50,000

3 Focus CIS 1 Rs. 1,50,000

4 Focus ASEAN +2 1 Rs. 1,50,000

5 General Areas 1 Rs. 80,000*

TOTAL 5 General AreasSource: Engineering Export Promotion Council http://www.eepcindia.org/mda-scheme.asp

Page 47: Automobile and Engineering Sector

FTP Provision for Engineering goods exports MARKET ACCESS INITIATIVE SCHEME Under MAI scheme, Financial assistance is provided for export promotion

activities on focus country, focus product basis. Financial assistance is available for Export Promotion Councils (EPCs), Industry and Trade Associations (ITAs), Agencies of State Government, Indian Commercial Missions (ICMs) abroad and other national level institutions/eligible entities as may be notified. A whole range of activities can be funded under MAI scheme. These include, amongst others,

I. Market studies/surveys,

II. Setting up of showroom / warehouse,

III. Displays in International departmental stores,

IV. Brand promotion,

V. Reimbursement of registration charges for pharmaceuticals and expenses for carrying out clinical trials etc., in fulfillment of statutory requirements in the buyer country,

VI. Testing charges for engineering products abroad,

VII. Assistance for contesting Anti Dumping litigations etc

Source: Engineering Export Promotion Councilhttp://www.eepcindia.org/mai-scheme.asp

Page 48: Automobile and Engineering Sector

MAI Cont…ELIGIBLE AGENCIESFinancial Assistance to:- Dept. of Central Government & Organisations of

Central/State Governments; - EPCs;- Registered Trade Promotion Organisations;- Commodity Boards;- Apex Trade bodies recognised under EXIM Policy;- Recognised Industrial clusters;- Individual exporters (only for testing and registration)

Page 49: Automobile and Engineering Sector

FTP Provision for Automobile & Engineering goods exports

Assistance to States for InfrastructureDevelopment of Exports (ASIDE)

The State Governments shall be encouraged to participate in promoting exports from their respective States. For this purpose, Department of Commerce has formulated a scheme called ASIDE. The Scheme was initially introduced in the Import Export Policy 1990-93 with import facility of Capital Goods at a concessional rate of Customs duty @ 25%. The Scheme has since undergone many changes and presently provides a facility for import of capital goods, including spares now at a concessional duty of 3%

1.9.2 Salient features of the (EPCG) Scheme :

(i) Import of Capital Goods for pre-production, production and post production including import of spares at 3% customs duty.

(iv) In case of SSI Units, the E.O. is equivalent to 6 times duty saved over a period of 8 years provided the CIF of such Capital Goods does not exceed Rs.50 Lakhs and total investment in Plant and Machinery does not exceed the SSI limits.

(vi) Import of second hand capital goods is allowed without any age restrictions.

Source: Directorate General of Foreign Tradehttp://dgftcom.nic.in/exim/2000/policy/ftp-plcontent0910.pdf

Page 50: Automobile and Engineering Sector

Opportunities:1. The growing need to outsource2. Higher frequency of introducing of newer

models by automakers 3. Global market opportunity itself is the

ultimate opportunity provided by auto industry.

4. Leverage on product engineering expertise to improve the worthiness and exports of auto component.

5. Acquisition in foreign markets

http://www.bioinfo.in

Opportunities For Indian Automobile Industry

Page 51: Automobile and Engineering Sector

Threats:1. Competition from other low cost countries like China, Taiwan, Thailand etc.2. Expansion of the European Union- inclusion

of Hungary, Czech Republic Poland etc which are major exporting countries to western Europe.

3. Appreciation of Rupee 4. Developments of new technologies like fuel

cell, hydrogen powered vehicles, which may affect the auto component industry.

Source:http://www.bioinfo.in

Threats For Indian Automobile Industry

Page 52: Automobile and Engineering Sector

DISCUSSION ON ECONOMICAL IMPACT

In the last decade their share in the Indian economy is around 5% of GDP.

The Indian automobile industry employs half a million people in the organised sector and about ten million people in the unorganised sector, which is twice in overall engineering sector.

Automobile Exports registered a growth of 22.30 percent during the current financial year, which is close to 39.1percent contributing to Engineering goods as a single classification.

Manufacturing units exceeded 18,04,619 this FY.Till 2009-10 the Import : Export ratio, is in the trend

of 1.75:1.

http://commerce.nic.in

Page 53: Automobile and Engineering Sector

Quality Standards for Automobile Sector Vehicles being manufactured in the country

have to comply with relevant Indian Standards (IS) and Automotive Industry standards (AIS).

Export goods follow a single harmonized standards for all the engineering goods, which is accredited in their PDA(Product Design Approval) norms.

Page 54: Automobile and Engineering Sector

Challenges For Exporters The internal barriers in the country and

constraints at international level had sluggish down the industry growth, these barriers predominantly are hindrances like–Tax structure especially the disparity in custom and excise duties on the raw material of auto components, and automobiles.

The unavailability of resources at reasonable cost for example- Power, Skilled Labour, Technology etc is also a major constraint.

International Journal of Economics and Business Modeling ISSN:0976–531X & E-ISSN:0976–5352, Vol. 1, Issue 2, 2010

Page 55: Automobile and Engineering Sector

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